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Is the Customer Really King?

Posted on in Leadership Development.

03 June 2010

Is the Customer Really King?

It might be heresy to say this, but your customers shouldn’t always rule.

The marketing world, much like the financial world, has been in considerable flux. But one thing seems fairly clear, and it has to do with the shifting balance of power between the companies that produce the goods, the retailers that stock and distribute them, and the consumers who are counted on to buy what’s provided.

We’re told that we’re in an entirely new age. Today, the story goes, the customer finally runs the show.

For a good many years, the world largely belonged to the manufacturing and marketing powerhouses that dominated consumer demand through the twin powers of promotion and product development: They sold, you bought. But a few decades ago, there was a sea change in which power transitioned to the retailers. The major retailers controlled what was featured in the stores and what appeared on the shelves and thereby determined what was available for the shopper to buy. Marketplace control went from Procter & Gamble and Sony to Walmart and Best Buy.

But now we’re told that we’re in an entirely new age — the “new normal” — when neither the manufacturer nor the retailer is in charge. Today, the story goes, the customer finally runs the show.

There’s a good deal of evidence in support of this. Not too long ago, mighty Walmart reportedly was forced to reinstate about 300 items that the company had eliminated from its shelves in an attempt to streamline its operations. Walmart shoppers apparently weren’t pleased with the disappearance of some of their favorite brands, and they let the company know it. The lesson learned, in the words of former CEO Lee Scott: “Rule No. 1 in retail, don’t aggravate your customer.”

Of course, Walmart isn’t alone in recognizing the need to pay closer attention to customers, whose loyal patronage can’t simply be assumed. Other retailers are also responding to the emergence of the newly empowered consumer. For example, Walgreens announced a renewed emphasis on “customer centric retailing,” redesigning up to 3,000 of its stores to make them easier to shop and more enjoyable for their shoppers. In the words of one leading industry advisor, retailers today have to take a different approach; they must “focus on exactly what the customer wants to buy.”

All hail the king

And so the new normal has brought us to a time when consumers seem firmly in command. After all, they’re the ones with the cash, and they have the access to information and seemingly limitless choices, thanks to the Internet. During this economic downturn, companies have realized that they can’t simply push what they hope to sell; they must wait for the consumer to resume spending. Companies must court customers, not dictate to them. Companies must be responsive to their customers’ blogs and tweets. They must entice them to convince others, seeking brand advocates who serve to proselytize through YouTube and Facebook. In short, companies must act more like Zappos and less like the traditional packaged goods marketer or department store promoter.

There’s a good deal of agreement that, in the new normal, the customer is king. And we all know, as Mel Brooks so memorably stated, “It’s good to be the king.”

The apparent conclusion is, whether you’re a manufacturer or a retailer, this customer king must now be treated like a king. But what does a king do? The king dictates his desires. The king’s word is law, and he’s always right. The king has subjects, not partners. The king is only spoken to when the king requests it.

Enticing, perhaps. But when business success requires establishing enduring company-to- customer relationships and not just generating transactions, there are some important caveats that companies must bear in mind. (See “Managing the Value of Your Brand” in the “See Also” area on this page.)

Treat me right

First, does the king really want to be treated like a king — or more like a colleague? There’s an increasing recognition that today’s customers aren’t imperious participants in the marketing process, sitting on high and simply waiting to be served. They tweet and blog for a reason, and that’s because they want to be involved not just in chatting about the products and services they use but in actually helping to make them better. The retail head of IBM’s Global Business Services recently summarized the situation this way: “Consumers have stated now that they are willing to help retailers through co-creation and collaboration.” “Co-creation and collaboration” don’t sound like words a king would use; they sound more like those of a partner.

One CEO’s mantra: “Employee First; Customer Second.”

Second, does putting the king in the position of primacy ensure that he’ll have a stronger emotional connection to the products and services he’s using? Though it seems logical that a relentless focus on the customer would make for a stronger relationship, this may well be an oversimplification. There’s an important addendum to this spotlight-on-the-customer refrain,

because you can only enhance your business performance by addressing the things that meaningfully differentiate your offerings from those of the competition.

Vineet Nayar, CEO of HCL Technologies, a 2.3 billion USD Indian IT company, maintains that the accent on shareholder value and even on customer relationships is wrong. His mantra has been expressed as “Employee First; Customer Second.” Nayar contends that the primary emphasis needs to be on the employees because they’re the essential factor driving all the positive business results that accrue when customers are served by a happier, more productive workforce.

In short, never forget who — or what — you rely on to maintain your competitive advantage — implying that you pay very close attention to your processes, operations, and what goes on internally. And to ensure your company’s health, first take care of the people who take care of your customer. Yes, that means the king must sometimes assume a secondary position. (See “Your Brand Is in Their Hands” in the “See Also” area on this page.)

And finally, do you give the king what he wants — or what he needs? That’s a real problem because the king may not know what he wants, or he might not be able to clearly articulate it. As Henry Ford reportedly said, “If I’d listened to customers, I’d have given them a faster horse.”

It’s crucial to pay close attention to customers’ behaviors and how they’re changing. It’s equally important to listen to their stated desires. But that doesn’t imply that you ask customers — or kings — to design your products. You must listen for the meaning and the insights that lie beneath the surface of their words. It’s been stated elsewhere, but remember that the iPod wasn’t a direct result of simply listening to owners talk about their ideas for improving the Walkman. The customer can indeed provide invaluable guidance, but the customer shouldn’t be tasked with being the leader. Listening to the king doesn’t mean obeying.

Maybe we need to think less about today’s new normal customers as kings and more about them as peers and partners. Kings may rule, but marketing today may yield far stronger returns by concentrating on the sort of equal, peer-to-peer partnership implied not by the throne but by the roundtable.
William J. McEwen, Ph.D., is Global Practice Leader for Gallup’s Brand Management practice. He is the author of Married to the Brand (Gallup Press, 2005) and coauthor of the Harvard Business Review article “Inside the Mind of the Chinese Consumer.”